- Pound (GBP) is falling after gains yesterday
- UK GDP rose 0.3% MoM vs 0.1% forecast
- Euro (EUR) is rising after solid industrial production data
- German GDP rose 0.2% QoQ in Q4
The Pound-Euro (GBP/EUR) exchange rate is falling, giving back yesterday’s gains. The pair rose 0.13% in the previous session, settling on Wednesday at €1.1544. It traded between €1.1524 and €1.1553. At 13:30 UTC on Thursday, GBP/EUR trades 0.10% lower at €1.1533.
The pound is under pressure despite the UK economy growing by more than expected in November.
According to data from the Office of National Statistics, the UK economy grow 0.3% month on month in November, up from a 0.1% contraction in October, and beat forecasts of 0.1%
However, the figures are less rosy than they appear at first glance, leaving uncertainty over the strength of underlying growth.
Much of the rebound was driven by a recovery at Jaguar Land Rover, and half the increase in GDP came from industrial production, with car manufacturing jumping 26%. This is unlikely to be repeated in the coming months.
Meanwhile, a rising tax burden and a softening labour market could mean consumer spending deteriorates, weighing on economic growth.
According to the data, the market still sees a February rate cut as highly unlikely, pricing it at just a 6% probability, while an April rate cut is priced at 91% certainty.
The EUR is rising as industrial production in the region expanded. November’s robust 0.7% month-on-month gain marks the third consecutive rise in output and exceeded expectations of 0.5% growth.
On an annual basis, industrial production expanded 2.5%, up from 1.7%, marking the largest year on year increase since May.
In other data, the German economy expanded for the first time in three years in 2025 as consumer and government spending began to fuel the sluggish recovery.
German GDP grew by 0.2% in the final quarter of 2025 and by 0.2% across the year as a whole.
The German economy has been stuck in a period of stagnation, with its industrial sector priced out of the export market and consumers choosing to save rather than spend.
Chancellor Friedrich Merz has launched a massive spending agenda to boost economic prospects, but this is taking time to feed through to the economy.
The economy is expected to gain momentum as investments return and amid a focus on infrastructure and defence spending.
